Gold and silver were as erratic Friday as the day’s news reports about whether or not Ukraine artillery destroyed parts of a Russian column that did or didn’t cross into Ukraine. The metals fell early, and hard, in what was described as “a pretty obvious takedown,” occurring as initial inspections of the “humanitarian convoy” vehicles, which definitely did not cross the border, came up “almost empty,” according to a BBC correspondent.

Then, writes Dan Norcini, recapping the action in gold, “around mid-morning, up went the yellow metal, recapturing the $1300 level as reports filtered into the market that Russian forces had crossed the Ukrainian border and been engaged by their troops.” When all was said, but far from done, spot gold and silver ended off0.7% and 1.4% respectively, with their near-term direction possibly hinging on the answer to this question.

In a MarketWatch column offering up “4 reasons gold is poised for a comeback,” InvestorPlace.com editor, Jeff Reeves, suggests that “it’s possible that gold has found a floor and that now is a decent time to buy.” He concedes that “there are still some big challenges for the precious metal — especially in the last week or so when prices have been steadily rolling back again. But even if investors are a bit early as they turn to gold, fears of overbought domestic stocks may make even an uncertain bet in gold a preferable alternative to some right now.” The four reasons he cites are 1) global physical demand, 2) a slowing in the pace of ETF outflows, 3) Smart money likes gold, and 4) Tapering delayed, buy not denied. And about the latter he reminds that “gold rallied from a low of under $1,200 at the end of June to $1,400 in August on the expectation that tighter monetary policy was on the way.”

As Jim Grant explains why he sees gold as an “undervalued asset,” MarketWatch columnist Brett Arends writes of having approached U.S. Treasury officials this week to find out “if they would consider selling some of the country’s gold reserves to pay the bills if the budget crisis escalates later this month. Their response? Not a chance….They remain firm believers in gold. Big-time.”

“The Treasury has considered that [selling] option, among the many others, and rejected it,” continues Arends. “‘Selling gold would undercut confidence in the U.S. both here and abroad,’ a spokeswoman said, ‘and would be destabilizing to the world financial system.’ She was quoting an official position laid out last year in a letter to Senator Orrin Hatch, but so far apparently little noticed on Wall Street. The Treasury’s position is, in a word, extraordinary. We hear all this skepticism these days about gold. Yet the Treasury itself considers U.S. gold holdings to be a key element in maintaining confidence in the country’s soundness—and the stability of the international financial system.”

“I have never in my life seen a market set up technically for a big bull move as gold/silver and the mining stocks are now,” argues Dave Kranzler, in a Seeking Alpha article. Kranzler, who also publishes The Golden Truth blog, writes that “Contrary to what’s being reported in the financial media and by market gurus in the U.S., it’s common knowledge abroad that the demand for physical gold globally hasreached extraordinary, unprecedented levels. In fact, after yesterday’s price take-down in the paper Comex market, premiums for gold bars in Hong Kong and Singapore reached all-time highs…. It is this premium and unprecedented demand for physically deliverable gold by the large gold-consuming eastern hemisphere countries like China, India and Russia that will ultimately ignite an extended move higher in gold/silver. This move will feature a short-squeeze/short-covering dynamic in the paper futures market that will take the gold bears, and even most equivocating gold bulls by surprise.”

And as the ETF’s impact on the gold price is debated, The Golden Truth, in an analysis of outflows from GLD, concludes that “the big price smashing of gold in mid-April was an operation designed to shake loose enough 400 oz. gold bars out of GLD in order to satisfy the enormous delivery demands coming from Asia, India and even within Europe. GLD is the only possible source of above-ground 400 oz. gold bars that could be used to satisfy this enormous demand for physically deliverable bars.”

When JPMorgan took over Bear Stearns in 2008, it famously inherited a slew of silver shorts. It also inherited from Bear Stearns the rights to sell electricity from power plants in California and Michigan. And according to a Federal Energy Regulatory Commission (FERC) document leaked to the New York Times, “Government investigators have found that JPMorgan Chase devised ‘manipulative schemes’ that transformed ‘money-losing power plants into powerful profit centers,’ and that one of its most senior executives [Masters] gave ‘false and misleading statements’ under oath.”

In a lengthy acknowledgement of the growing interest in alternative currencies, Bloomberg reports that “Distrust of the Federal Reserve and concern that U.S. dollars may become worthless are fueling a push in more than a dozen states to recognize gold and silver coins as legal tender.“

One example cited is the proposed Texas Bullion Depository, which “might become a bi-partisan effort,” and according to Currency Wars‘ author Jim Rickards, “would offer sovereign backing for deposits and make buying and storing gold easier. He said the coin measures, while impractical, have symbolic value,” adding that “We are seeing a distinct movement back to a world where gold is considered money.”

Gold and silver futures gained 1.5% and 1.7% respectively after the March non-farm payrolls report showed a gain of only 88,000 jobs, the lowest level in nine months and a number that will “likely silence those calling for a phased withdrawal” of quantitative easing, according to USA Gold’s Peter Grant.

Reuters reports that “investors in droves bought back their bearish bets, boosting gold prices in a process known as short-covering, analysts said.” And one options trader told The Street that “There’s a lot of shorts in the market here” and “they were in control as of yesterday. But today it was quite painful to be short with that number that came out.”

As gold and silver futures end Tuesday with gains of 0.9% and 1.1% respectively, MarketWatch quotes the Got Gold Report’s Gene Arensberg, who says that short positions among large speculators such as hedge funds are about 60% higher than last May when gold found support near $1,526. (see above chart)

“If the funds are convinced gold’s correction is done, that means they have a much larger short position this time to cover,” said Arensberg, calling that “high-octane buying pressure.” He also reasons that “Locals and smaller traders will want to front run the specs too, adding to the violence of the short-covering rally. That could cause quite a surge in the futures price for gold short term, and it’s how the gold pullback last year ended.” More from Arensberg, who charts Tuesday’s “Gold breakout attempt with higher volume.”

Before gold and silver futures ended Friday down 1.6% and 1.7% respectively, Jesse’s Café Américain wrote in an intraday gold commentary that it was, “Hard to miss the deliberate price smackdown. As I said yesterday, ‘I will not be surprised to see a final big move to run the stops to the downside in the precious metals, and take additional shares and units of paper claims before the markets break free.’